We rightly honour and respect people for the livelihoods they carve out and the contribution they make to workplaces and the economy. But what is often missed as a vital and valued path to meaningful livelihoods and economic contribution is self-employment, writes Australian Small Business and Family Enterprise Ombudsman, Bruce Billson.
Even our formal statistics miss what self-employed people are by focusing on what they are not – i.e. ‘non-employing businesses’. Just where do people think so many employing small businesses come from?
Let’s celebrate the self-employed
The dream to be your own boss, working when and where you choose while pursuing a passion, is what motivates many Australians to be self-employed. In fact, some 60 per cent of small businesses are self-employed but because they often go about their business quietly, their vital economic contribution can be overlooked.
We need to do more to energise the enterprise of people with an entrepreneurial spirit to pursue their dreams.
Self-employment already allows 1.6 million Australians to earn a reliable income while preserving autonomy and choice. In particular, Census data shows that self-employment is particularly attractive to older people and women.
Mature age people are more likely to be a business owner than an employee. More than one in five self-employed people are aged 60 and over, using the skills and knowledge developed over their working life while controlling when they choose to work.
Similarly, flexibility to control work hours is important to women with statistics showing more than two-thirds of self-employed women choose to work part-time, compared with only 47 per cent of women in the general workforce.
The difference between self-employment and the gig economy
We need to understand and recognise the difference between self-employed Australians and vulnerable workers. Self-employed people are not vulnerable, so-called ‘gig economy’ workers, who need to be protected.
And there is a risk if we allow that misconception to grow – we will snuff out the flexibility that’s so valued and important to the success of self-employment. This would harm the economic contribution and prospects for future business growth of these enterprising women and men. We would be less able to adapt and succeed in the contemporary economy.
Some of the confusion appears to come through the use of digital platforms by self-employed workers to drum up business.
We need to reaffirm the sound and long-standing legal distinction between ‘contracts of service’ and ‘contracts for services’, and have a framework that avoids inadvertently entangling an ever-growing number of entrepreneurs and small businesses who rely on digital platforms.
It is important that any measures to extend the Fair Work Commission’s power to regulate ‘employee-like work’ – including in the gig economy – is precisely defined to avoid undermining legitimate self-employment and entrepreneurship.
These enterprising people have a high level of control over the work they perform, and they carry the risk for making a profit or loss on each task or job. In most cases, they use their own tools and equipment and strike an agreement with the client around when they will work to complete the job.
We already have rules to stamp out sham contractors which make it illegal to pretend an employee or someone with the same characteristics as an employee is a contractor, and undercutting their wages and conditions. If it is a matter of ensuring existing legal safeguards around independent contracting are accessible and effective, let’s look at real solutions such as creating a Federal Circuit Court List for small business and code matters.
Right-sized regulations and proportionate compliance are vital to maintaining the strong contribution of small and family businesses to employment and self-employment. Small businesses already face a significant compliance burden, and we must make sure we do not generate legal and compliance confusion by conflating commercial and competition matters with employment matters.
Surely, it is not the intention to restrict opportunities for individuals to determine for themselves how they make a living?
The way we do business has changed
The emergence of digital platforms has fundamentally changed the way in which small businesses connect and sell to their customers.
Some people have built their entire businesses on social media and digital platforms, which serve as single points of contact to reach a significant portion of the Australian and international markets. For others, they can supplement their primary income by choosing their own participation and hours to perform specific transactional tasks. And small businesses often achieve these business goals using multiple platforms to shape and grow their business.
A real-life example is an older person who has retired from full-time employment seeks to work for 8 to 10 hours a week, and uses an app-based platform to find jobs as a carer. If this person were deemed to be ‘precariously employed’ and required to be hired for fixed hours, they would be denied the flexibility to determine their own hours of work.
The Victorian Government conducted an inquiry into platform-based work, drawing on a national survey of 14,000 people, and found that:
- Only 2.7 per cent of digital workers earned all their income from platform work.
- current on-demand workers were found, on average, to perform 10 hours work per week.
- The strongest motivation for undertaking platform work was ‘earning extra money’.
Let’s honour and value self-employed people and independent contractors for mapping out a livelihood that works for them, while providing skill mobility, strengthening economic vitality and enabling immediate access to critical business and expert services.
Self-employed people make a valued contribution, complement the employer-employee workforce, add agility to the economy that increases productivity, delight customers and clients, and deserve to be celebrated – not strangled.